- Bitcoin miners are increasingly adopting a mine-and-hold strategy as demand for mining hardware increases
- Riot seeking to raise its current hash rate capacity of 2.6 exahash per second (EH/s) to 7.7 EH/s by fourth quarter of 2022
Riot Blockchain’s bitcoin production numbers in September quadrupled year over year as the mining company has so far produced nearly 2,500 BTC in 2021.
The Colorado-based miner produced 406 bitcoins last month and now holds 3,534 BTC, all of which were produced by its mining operations, Riot Blockchain reported on Tuesday.
“Not only do we have a team of bitcoiners heading up our industry-leading bitcoin mining operations, but we fully support the bitcoin network,” CEO Jason Les told Blockworks in an email. “Therefore, we believe holding onto our 3,534 bitcoin … is aligned with our strategy as a bitcoin company.”
Bitcoin’s price was up 8% in the last 24 hours to about $54,740 as of 3 p.m. ET on Wednesday, according to CoinGecko data, giving Riot’s held bitcoin a value of about 193 million.
“We have historically seen that when bitcoin price appreciates and mining economics improve, demand for mining hardware increases,” Viridi Funds CEO Wes Fulford said to Blockworks in an email. “As a result, bitcoin miners are increasingly adopting a “mine and hold” strategy as the bitcoin on their balance sheets serves as a natural hedge against inflated [capital expenditure] spending driven by these opportunistic, demand-driven hardware price increases.”
Bitcoin miners earned $1.3 billion in revenue from block rewards and transaction fees during September, a 7% decline from the prior month, according to a Compass Mining report published Wednesday.
Riot competitors Marathon Digital and Hut 8 Mining recently reported mining 340.6 and 264 bitcoins, respectively last month, bringing the companies’ combined total of bitcoin held to nearly 12,000.
“Given the fixed maximum supply of Bitcoin, continued miner accumulation will result in less daily exchange supply and act as a bullish tailwind for the price of Bitcoin,” Fulford added.
Las Vegas-based Marathon also obtained a $100 million revolving line of credit, secured by bitcoin and USD, with Silvergate Bank, allowing it to purchase more miners and cover other expenses without being forced to sell its bitcoin or stock.
“One large miner holding their bitcoin rather than selling will likely not have a direct effect on the market,” said Compass Mining CEO Whit Gibbs. “However this strategy of accumulating bitcoin on the company’s balance sheet will lead to a healthy increase in the company’s valuation.”
Riot Blockchain eyes growth
Riot Blockchain currently has a deployed fleet of 25,646 miners with a hash rate capacity of 2.6 exahash per second (EH/s). In late September, 2,000 S19J Pro Antminers were shipped to Riot’s Whinstone facility.
Riot completed its acquisition of Whinstone US from Northern Data in May for 11.8 million shares of Riot common stock and $80 million in cash. Based in Rockdale, Texas, Whinstone’s 100-acre site had a total power capacity of 750 megawatts, at the time Riot announced the acquisition, with 300 megawatts developed.
“We believe the acquisition of Whinstone remains a transformational decision for the company and provides additional capacity for miner deployment as well as optionality for alternative miner/datacenter hosting,” states a Compass Pointe Research & Trading note published in August. “Bitcoin miners are highly correlated with their underlying asset although we believe Riot should continue to outperform given its significant scale.”
Another 4,000 S19J Pro Antminers are scheduled to be shipped from Bitmain’s Malaysia factory this month, the firm reported. By the fourth quarter of 2022, Riot intends to have roughly 81,000 Bitmain Antminers up and running.
“Our hash rate and presence in the space continues to grow at unprecedented rates, particularly with the continued development of Riot’s Whinstone facility,” Les said. “As our successful scaling continues into 2022, we anticipate a hash rate of 7.7 EH/s along with a continued dedication to holding the undeniable value that is Bitcoin.”
Are you a UK or EU reader that can’t get enough investor-focused content on digital assets? Join us in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. Buy it now.